"This has come in below our expectations... with all probability it is likely that core inflation momentum may have seen some easing.

"Even at 7.45, it is still above the comfort zone (of the central bank) and RBI (Reserve Bank of India) would want to see a sustained drop in this inflation trend... I think we need to see a couple more months particularly in core inflation trending lower to give some confidence to RBI.

"Clearly, a lot of these pressures are still evidently supply-side driven. So the fiscal consolidation has to be more meaningful to allow a more sustainable downtrend in inflation trajectory."

Leif Eskesen, chief economist for India and ASEAN, HSBC

"The inflation data is a surprise. It shows food inflation is lower than expected. But the underlying inflationary pressures are firm, and this number is not necessarily sufficient to change the Reserve Bank of India's reluctance to cut interest rates."

Saugata Bhattacharya, Economist, Axis Bank , Mumbai: "The numbers are not significantly lower than what was estimated. What is also of concern is the revision in the August numbers.

"However, with the need for balance between growth and inflation, this increases the possibility of earlier easing in monetary policy. It is likely the projection for March (inflation) may be lower than RBI's estimate of 7.5 percent."

Jyoti Narasimhan, Senior Principal Economist, IHS Global Insight

"Despite the downtick, elevated inflation will prevent the RBI from easing aggressively. The recent fuel subsidy cuts will stoke fuel inflation in the coming months, and have secondary effects on core inflation, keeping inflation well above 7.5 percent through the end of FY2012/13.

"With inflation unlikely to recede substantially, we no longer expect the RBI to soften its stance and cut policy rates on 18 December to support flagging economic growth.

"With persistent and high inflation, IHS Global Insight now expects the RBI to ease only in early 2013, and cut the repo rate by 50 basis points in January."

"The number is better than what most people had expected, but based on the past experiences there is a likelihood of the numbers getting revised.

"The Reserve Bank will wait till the headline inflation falls by 100 basis points more. The government is putting pressure, but the Reserve Bank will not succumb to that pressure until the inflation comes down to the comfort zone."

Sujan Hajra, chief economist, Anand Rathi Securities

"The extent of slowdown in the Indian economy is somewhat more severe than what we have been thinking, and the demand contraction embedded in today's number is more serious. The economic recovery may take slightly longer, but the Reserve Bank of India is likely to wait for at least one more inflation data before taking a call on cutting interest rates."

Background

- Industrial production unexpectedly shrank an annual 0.4 percent in September, compared with a forecast of a rise of 2.8 percent in a Reuters poll.

- India's manufacturing growth inched up in October from September's 10-month low, supported by a pick-up in new orders and an easing of price pressures.

- India's services sector grew at its slowest pace in six months during October as weakness in the United States and Europe hurt orders and forced firms to hire fewer workers, suggesting the worst of the economic slump is not over yet.

- The Reserve Bank of India may ease monetary policy as early as January, Governor Duvvuri Subbarao said, as price pressures ease in Asia's third-largest economy in the first part of next year on the back of slower growth.

- The central bank left interest rates on hold last month but cut the cash reserve ratio for banks, defying pressure from the government to lower rates for the first time since April but also indicating it may ease policy in early 2013.